Why Social Security IS NOT a Ponzi Scheme

[Here’s the counter to conservative bullshit. See also: The Real Ponzi ~DS]

A reader writes:

What a silly argument made by Indiviglio. If a Ponzi scheme is “an economic arrangement where the money paid into the system by later entrants is paid right back out as benefits to earlier entrants,” that pretty much describes any form of insurance. The defining characteristic of a Ponzi scheme is that it is unsustainable, because it requires, like a chain letter or Amway, a geometrically increasing number of participants to deliver the promised returns. (Amway stays afloat because most participants pay in a little – or a lot – but withdraw without ever receiving any return.) Neither insurance nor Social Security requires a geometrically increasing number of participants so long as the system is funded based on sound actuarial principles.

Another parses further:

Having represented the victims of actual Ponzi schemes in court, I feel compelled to point out an important distinction between Ponzi schemes and Social Security: a Ponzi scheme is just that, a scheme. The definition provided in Zaid Jilani’s dictionary omits this important component. The participants are kept in the dark about how the benefits are obtained. Thus, a Ponzi scheme is not really an economic “arrangement” in the sense that the participants have agreed to it. By contrast, we all know (or should know) how Social Security works. It is more akin to something else, namely an insurance program where the insured event (reaching the retirement age) is guaranteed (barring premature death).

Another:

So if Social Security were a Ponzi scheme, Michael Astrue, current head of the SSA, would take from current payers, skim off a huge amount, live lavishly, pay earlier investors outrageous returns, and then go bankrupt at the next downturn. I’m sure Astrue makes a decent salary, but the administrative cost of Social Security is 0.39% (see how many mutual funds have expense ratios that low), and the returns to retirees are modest.

Another:

The problem with a Ponzi scheme is that, at the sorts of exorbitant rates of return that are generally promised in a successful Ponzi scheme (see Madoff, Bernie), Ponzi schemes are unsustainable on a long-term basis. They require the investment base to grow much, much faster than the population which inevitably becomes impossible at some point.

Yet another:

In a Ponzi scheme, the organizers of the fund don’t have the power of taxation and don’t have any actual vehicle to earn money. But the government has both; they can increase taxes to pay for Social Security, and they can adopt measures to make the economy grow, such as by increasing immigration. Notice that there is no difference between the populace paying for its retirement through private investment and paying it for it through taxes for Social Security; either way assumes that there will be enough growth to support a group of non-working people in addition to supporting the working people.

Another:

Even if you think that the “fund as you go” approach somehow made Social Security a Ponzi scheme, it hasn’t been that way since the 1980s. The 1980s reforms specifically adopted a model in which a surplus was built up to help cover expenses in the future. In other words, and unlike a Ponzi scheme, a lot of the money being paid out today and for the next 30 years will effectively be returned to the people who put it into the fund.

One more:

It is time to step back and do some rational thinking on this topic. There is in the neighborhood of $2.5 trillion in the Social Security “Trust Fund,” although this fund is roundly skewered by critics. Yet there have been huge surpluses in the past that have built up this value, so the basic Ponzi assumption of money coming in barely keeping ahead of money going out is false on its face.

So let’s think about this. If you had a trust fund backing up your private pension, where would you invest it to best insure that you will have it when you need to retire?

1. In the stock market? Many people do, but many also saw their trust fund drop in half in value very recently. Not very secure. Plus, what would be the value of the U.S. stock market if the U.S. government collapsed, and was unable to pay it’s bills? It would surely drop by even more than half very quickly.

2. In gold? Gold lost half of its value during part of the Reagan administration, and it may well do that again now that Glenn Beck is less able to pump the fear of global collapse required to keep the price up.

3. In foreign investments? Maybe for you, but I doubt any Tea Party Republican would stomach that.

In reality, if you really want to be as safe as one can reasonably be in this world, you would do exactly what the international markets did the day after the debt downgrade. Invest in the safest securities in the world: U.S. Treasury debt, which is where the Social Security Trust Fund is currently invested.
~~

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Happiness is the only good. The time to be happy is now. The place to be happy is here. The way to be happy is to make others so. ~Robert Ingersoll

All religion is a foolish answer to a foolish question. ~Thomas Shelby

The strongly religious fear our capacity for moral reasoning that does not require a magical, invisible deity. They fear our ability to be ethical without the threat of hell or the reward of heaven. They fear that our allegiance is not to this or that country, or this or that prophet, or this or that guru, but to humanity as a whole. ~Phil Zuckerman

The idea that God could only forgive our sins by having his son tortured to death as a scapegoat is surely, from an objective point of view, a deeply unpleasant idea. If God wanted to forgive us our sins, why didn’t he just forgive them? Why did he have to have his son tortured? ~Richard Dawkins

Small is beautiful, when small is skilled and dedicated. ~Gene Logsdon

All religions are lies and scams, and all believers are victims. ~David Silverman

We [atheists] have no martyrs, we have no saints. ~Christopher Hitchens

Morality is doing right, no matter what you are told. Religion is doing what you are told, no matter what is right. ~H L Mencken

I've observed that people tend to live at one of two extremes in the spectrum of life: those who live on the edge, and those who avoid the edge. Those who live on the edge are hanging out in the most dangerous and unstable places — yet they're also often the most powerful agents of change, because the edge is where change is happening; away from the edge, things are naturally unchanging. ~Thom Hartmann

Religion. It's given people hope in a world torn apart by religion. ~Jon Stewart

My 12th year was my most Christian and most boring year in my life. ~Chuck Berry

Come on. You just can’t come up with anything more ridiculous than someone who honestly thinks that all human woes stem from an incident in which a talking snake accosted a naked woman in a primeval garden and talked her into eating a piece of fruit. ~Keith Parsons

When men stop believing in God, it isn't that they then believe in nothing: they believe in everything. ~Umberto Eco

Christians don’t need to be born again, they need to grow up. ~John Shelby Spong

Life is not a problem to be solved, nor a question to be answered. Life is a mystery to be experienced. ~Alan Watts

Society is like a stew: If you don't stir it up every now and then, the scum rises to the top.~Edward Abbey

You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete. ~Buckminster Fuller

How thoughtful of God to arrange matters so that, wherever you happen to be born, the local religion always turns out to be the true one. ~ Richard Dawkins

I’m not saying there isn’t a god, but there isn’t a god who cares about people. And who wants a god who doesn’t give a shit? ~Robert Munsch

One of the great tragedies of mankind is that morality has been hijacked by religion. ~Arthur C. Clarke

Give a man a fish, and you'll feed him for a day; Give him a religion, and he'll starve to death
while praying for a fish. ~ Anon

When you understand why you dismiss all the other gods, you will understand why I dismiss yours. ~ Stephen Roberts

Life is without meaning. You bring the meaning to it. The meaning of life is whatever you ascribe it to be. Being alive is the meaning. ~ Joseph Campbell

The only true definition of an atheist: a person who disbelieves or lacks belief in God or gods. ~Oxford English Dictionary

You have good people doing good things and evil people doing evil things. But for good people to do evil things, that takes religion.

Faith is just another word for gullibility.

I sang as one / Who on a tilting deck sings / To keep men's courage up, though the wave hangs / That shall cut off their sun. ~C. Day Lewis

Resilience Tools (Basic)

Freethought/Stoics

Religion Divides

The Wikipedia of Christian Terrorism (Link)

Books of the Freethinkers Bible

What is a fact beyond all doubt is that we share an ancestor with every other species of animal and plant on the planet. We know this because some genes are recognizably the same genes in all living creatures, including animals, plants and bacteria. And, above all, the genetic code itself — the dictionary by which all genes are translated — is the same across all living creatures that have ever been looked at. We are all cousins. Your family tree includes not just obvious cousins like chimpanzees and monkeys but also mice, buffaloes, iguanas, wallabies, snails, dandelions, golden eagles, mushrooms, whales, wombats and bacteria. All are our cousins. Every last one of them. Isn't that a far more wonderful thought than any myth? And the most wonderful thing of all is that we know for certain it is literally true...

The whole world is made of incredibly tiny things, much too small to be visible to the naked eye — and yet none of the myths or so-called holy books that some people, even now, think were given to us by an all-knowing god, mentions them at all! In fact, when you look at those myths and stories, you can see that they don't contain any of the knowledge that science has patiently worked out. They don't tell us how big or how old the universe is; they don't tell us how to treat cancer; they don't explain gravity or the internal combustion engine; they don't tell us about germs, or anesthetics. In fact, unsurprisingly, the stories in holy books don't contain any more information about the world than was known to the primitive peoples who first started telling them! If these 'holy books' really were written, or dictated, or inspired, by all-knowing gods, don't you think it's odd that those gods said nothing about any of these important and useful things? -Richard Dawkins

Prayer seems to me a cry of weakness, and an attempt to avoid, by trickery, the rules of the game as laid down. I do not choose to admit weakness. I accept the challenge of responsibility. Life, as it is, does not frighten me, since I have made my peace with the universe as I find it, and bow to its laws… It seems to me that organized creeds are collections of words around a wish. I feel no need for such.

I know that nothing is destructible; things merely change forms. When the consciousness we know as life ceases, I know that I shall still be part and parcel of the world. I was a part before the sun rolled into shape and burst forth in the glory of change. I was, when the earth was hurled out from its fiery rim. I shall return with the earth to Father Sun, and still exist in substance when the sun has lost its fire, and disintegrated into infinity to perhaps become a part of the whirling rubble of space. Why fear? The stuff of my being is matter, ever changing, ever moving, but never lost; so what need of denominations and creeds to deny myself the comfort of all my fellow men? -Zora Neale Hurston

Democratic Socialism

Socialist Alternative is the organization that spearheaded the campaign to elect Kshama Sawant to Seattle City Council, the first independent socialist elected in a major U.S. city in decades. We are a national organization fighting in our workplaces, communities, and campuses against the exploitation and injustices people face every day. We are community activists fighting against budget cuts in public services; we are activists campaigning for a $15/hour minimum wage and fighting, democratic unions; we are people of all colors speaking out against racism and attacks on immigrants, students organizing against tuition hikes and war, women and men fighting sexism and homophobia.

We believe the Republicans and Democrats are both parties of big business, and we are campaigning to build an independent, alternative party of workers and young people to fight for the interests of the millions, not the millionaires.

We see the global capitalist system as the root cause of the economic crisis, poverty, discrimination, war, and environmental destruction. As capitalism moves deeper into crisis, a new generation of workers and youth must join together to take the top 500 corporations into public ownership under democratic control to end the ruling elites’ global competition for profits and power.

We believe the dictatorships that existed in the Soviet Union and Eastern Europe were perversions of what socialism is really about.

We are for democratic socialism where ordinary people will have control over our daily lives.

An atheist believes that a hospital should be built instead of a church. An atheist believes that deed must be done instead of prayer said. An atheist strives for involvement in life and not escape into death. He wants disease conquered, poverty vanished, war eliminated. ~Madalyn Murray O'Hair, Founder

In the history of the world, the number of times a supernatural anything has been proven true is zero. Every god, ghost, spirit, devil, possession, and miracle ever claimed true is a lie. No exceptions. The number of times an atheistic (godless) argument has been proven wrong by a theistic argument is zero... In contrast, every time a theist-versus-atheist argument has been settled, an atheistic argument has won. This does not mean science is antireligion; it just means (or rather, strongly implies) religion is wrong... I challenge anyone to find any scientifically valid testable proof of anything supernatural, ever. If you can prove it, even once, I'll quit my job. I'm not nervous, as it has never been done in history, because it's ALL a lie. ~David Silverman, President

Local Organic Family Farms

THE SMALL ORGANIC FARM greatly discomforts the corporate/ industrial mind because the small organic farm is one of the most relentlessly subversive forces on the planet. Over centuries both the communist and the capitalist systems have tried to destroy small farms because small farmers are a threat to the consolidation of absolute power.

Thomas Jefferson said he didn’t think we could have democracy unless at least 20% of the population was self-supporting on small farms so they were independent enough to be able to tell an oppressive government to stuff it.

It is very difficult to control people who can create products without purchasing inputs from the system, who can market their products directly thus avoiding the involvement of mercenary middlemen, who can butcher animals and preserve foods without reliance on industrial conglomerates, and who can’t be bullied because they can feed their own faces. ~Eliot Coleman